Feb 4, 2025 4 min read

Week 6, 2025

Overview

DeepSeek impresses with tech, not costs
OpenAI speeds up launch to counter DeepSeek
Microsoft drifts from OpenAI partnership
Big Tech reports strong earnings
Threads and Bluesky eye TikTok's market
Apple drops AR glasses project
Microsoft starts AI impact assessment
Advertisers make their way back to X

Key developments

DeepSeek continues making waves in the AI world

Here are some key points:

Their engineering innovation is genuine.

DeepSeek has managed to squeeze remarkable performance out of lower-end GPUs through precise optimization - a classic example of necessity breeding invention.
As one analyst put it, "It's like they couldn't afford a Formula 1 engine, so they redesigned the whole car to go faster anyway."

The cost savings claims are somewhat exaggerated.

While DeepSeek has touted its $6 million training costs, that's just the final bill.
Industry experts estimate total development costs north of $500 million - not quite the bargain it's made out to be.

The timing was strategic.

Launching on Trump's inauguration day sent a clear message: U.S. export controls aren't slowing China's AI progress, and America's grip on AI leadership might be slipping.

They may have copied ChatGPT.

There's been chatter about DeepSeek taking advantage of data from ChatGPT using "distillation" techniques.
But here's the thing - it's an open secret that everyone's doing it.
Even Microsoft's CEO Nadella acknowledged in December that controlling such practices is "practically impossible."

This could be Apple's moment.

The lightweight model architecture means they could finally jump into the AI game without breaking the bank or partnering with OpenAI.
Their patience in avoiding massive AI investments might just pay off, especially since these models could run smoothly on iPhones.

But it's not all smooth sailing.

The U.S. government is pushing back hard - Congress, the Navy, and NASA have all banned DeepSeek.
Japan and Taiwan have followed suit, barring government employees from using it.
Security experts are particularly scathing, with one noting that "DeepSeek's privacy policy isn't worth the paper it's written on."

OpenAI is picking up the pace

Competing with DeepSeek.

They rushed out o3-mini, their new small inference model.
They also launched DeepResearch, their research agent tool, claiming it's 3x more accurate than DeepSeek.

Big Money Moves:

They're looking to raise $40B at $340B valuation, which is double what it was 3 months ago.
SoftBank, their Stargate partner, is leading this funding round.
If the deal goes through, SoftBank would overtake Microsoft as the biggest shareholder.

Microsoft is gradually distancing itself from OpenAI

They're playing both sides: investigating data theft claims with OpenAI while offering DeepSeek R1 through Azure and GitHub.
They dropped their exclusive right to provide cloud infrastructure to OpenAI.

There's also tension over equity adjustments as OpenAI shifts to a for-profit model.

Big Tech report quarterly earnings

Meta

Revenue up 21%, net profit jumped 49%.
Strong ad performance: 6% more ads shown, 14% higher price per ad.
Daily active users hit 3.35 billion, up 5%.
Plans $60-65B investment in AI infrastructure this year.

Apple

Revenue grew 4%, net profit up 7.1%.
iPhone sales dipped 0.8%, but Mac and iPad both up 15%.
Services division led growth with 14% increase.

Microsoft

Revenue up 12.3%, net profit increased 10%.
Market concerns over slowing cloud growth.
Planning $80B AI infrastructure investment for 2025.

Netflix

Revenue jumped 16%, operating profit soared 52%.
Added 18.9M subscribers, doubling Wall Street expectations.
Total subscribers now exceed 300M.
Stock surged 14% on results.
Responded with price hikes in US and Canada.

Social platforms are racing to fill the TikTok vacuum

Blue Sky has introduced a TikTok-style vertical video feature.
X has also recently rolled out a vertical video function.
Meanwhile, Meta unveiled a video editing tool called “Edits” to compete with TikTok’s “CapCut.”
It is also ramping up efforts to attract TikTok creators to Threads.
Zuckerberg admitted they misjudged TikTok early on.
He noted that they didn’t view TikTok as a social platform at the time—which delayed their response.
Meanwhile, LinkedIn has experienced a 35% surge in short-form video viewing.

Apple pulls the plug on AR glasses

Apple has scrapped their AR glasses project following disappointing internal reviews.
All team members have been reassigned to different departments within the company.
However, they are still actively developing a successor to their Vision Pro headset.
Meta stands to gain significant market share from Apple's unexpected exit.
Their Ray-Ban smart glasses have proven successful, with over a million units sold last year.

Microsoft takes a deeper look at AI's societal impact

The tech giant has created the Advanced Planning Unit (APU), a team reporting straight to CEO Nadella.
They're bringing in economists and psychologists to study AI's impact on society, health, and work.

Major advertisers eye return to X

Amazon is increasing ad spending on X.
Apple is also considering a return to the platform.
Both companies appear mindful of Musk's influence in the new Trump administration.
Meanwhile, Threads (300M+ users) starts testing ads in US and Japan.

Other

AI

OpenAI's paid users triple to 15.5M.
OpenAI launches ChatGPT Gov.
OpenAI reveals "Operator" AI agent.
Perplexity debuts mobile AI agent.
Perplexity launches Sona API.
Alibaba releases Qwen 2.5-Max.
ByteDance drops Doubo-1.5-Pro.
Tencent shows off 3D AI model.
Mistral launches Small3.
Anthropic adds citation feature.
Gemini to power Galaxy S25.

Apps / Platform

Apple releases iOS 18.3.
Google Maps accepts Gulf of America.
Meta likely to continue fact-checking overseas.
X launches digital wallet with Visa.
Spotify paid out $10B in royalties last year.

EV / Autonomous

Waymo expands testing to 10 cities.
GM saves $1B/yr after dropping Cruise.

Crypto / Blockchain

Tether reports $13B profit for last year.
Trump launches crypto working group.
Trump pardons Silk Road founder.
Ivanka warns about fake memecoin.
Bill Gates criticizes crypto bubble.

Regulatory

Musk spent $290M on '24 election.
OpenAI spent $1.76M on lobbying last year.

Etc

Meta settles Trump account ban lawsuit.
Google provided AI to Israel since war started.

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